Find Your Resource

Q: I own a majority of the stock in my company and an ESOP owns the rest. I’d like to sell my shares, but this is not the right time for the ESOP to buy them. I have had an offer from someone who wants to purchase them and retain the ESOP. I think the buyer would be a good fit for us.

Q: Our ESOP owns less than 100% of the shares. If we sell shares or buy shares from non-ESOP owners, do we have to use the ESOP valuation?

Q: If a company wants to buy us but wants to put some of the purchase price in escrow, can they do that?

Is the ESOP administrative committee the same as the plan fiduciary or the plan trustee?

Q: Does our board have a fiduciary duty to focus only on shareholder value?

Q: We have heard that C corporations must put at least 30% of shares in the ESOP trust to receive tax advantages. Does the same 30% minimum apply for an S corporation even though the tax advantages are different?

Our company is a 100% S ESOP. We have contributed more than the Section 415 limit for our ESOP and 401(k). Are we exempt from excise taxes because we are a 100% S ESOP?

Q: Does Canada have anything like the US ESOP?

Q: We are a 100% S-Corp ESOP and want to provide certain employees with synthetic equity but are having difficulty deciding between phantom stock and stock appreciation rights (SARs). It seems SARs are more common. How do we decide?

Q: Our company is considering two-part financing for an ESOP transaction. It would consist of a bank loan and a seller note. What’s unusual about what we are considering concerns the seller note. We are thinking of repaying the seller note with a life annuity (specifically, the company or the ESOP trust pays the seller a fixed dollar amount per month until the seller dies, at which point payments stop and the note is satisfied). Have you seen examples of this approach? Do you see any problems or concerns with it?